By Kristi De Rycke, Registered Assistant
Being single has its advantages but also has challenges of its own. 42% of adults are single (1). The reasons vary including by choice, still seeking, post-divorce or widowed. What are considerations to look at when you are single to be financially sound and savvy?
Expecting the Unexpected: Make certain that you are protected in an event of something unpredictable happening. A standard recommendation is to have 3 to 6 months of expenses saved. If you are single and do not have another income to rely on, consider a higher percentage similar to 9 or 12 months of living expenses.
Join a Team: Nobody is alone in this world. Make the connections you want and need. Besides joining a group for socialization and joy, consider a group that you can bounce ideas off of when it comes to personal finance. If you would rather spend time with people doing things more interesting to you than talking about finance, consider hiring a financial planner.
Credit is Given Where Credit is Due: Pay very close attention to your credit score and find ways to improve it. When applying for any loans, they will look at your score and your score alone. Make and keep it a good one.
Disability Insurance: A general guideline for short term disability is 60% of your income. When you are going it alone, consider looking at closer to 80%. Another option is to inspect your current expenses and how much you actually need to survive on if you were disabled. Make sure to save and invest this amount and keep it separate from other financial goals.
How Secure is Your Social Security: Singles have fewer options for filing than married friends? However, if you were married for a decade or more in the past you may qualify for benefits based on his or her work history. This is true regardless of if you divorced or are widowed.
Hiring Your Money Handler: What will happen if you are not able to manage your finances? You should look into assigning a power of attorney. This can be a difficult decision on whom you will trust. Know that you can revoke this in the future. There are various choices. You can set up the POA to start immediately upon your incapacitation and it expires at your death. You can also do a Limited POA for a set amount of time or a particular transaction like a sale of your home.
Taking Care of You: What happens when you are not able to physically take care of yourself? You should seriously consider if Long Term Care insurance would be in your best interest. Look into facilities in your area and find out what the rough annual cost would be. Then consider taking out a policy to match as soon as possible. The cost of these policies increases greatly the older you get.
Why Life Insurance: You may be thinking that you do not need life insurance if you are not concerned with protecting someone else if you are gone. This may be true for you. The average cost of a funeral is estimated around $10,000. Do you have enough in an emergency fund or savings to cover that for your family in the event something happens to you? If not, you may want to consider a very low-cost term insurance to cover any funeral costs. Do you have an extended family relative, friend or charity that you would like to provide for after your death? This would be another reason to look into life insurance. Did you know that you could purchase a life insurance policy with long-term care benefits?
Who Decides When You Can’t: Tough questions can arise in an end-of-life situation? If you were married, this decision would automatically go to your spouse. Since you are not, this could make things tough for various family members and friends to make a decision. Consider assigning a Medical Power of Attorney. Share your wishes in writing with this person so that they can more easily make a decision during a difficult time.
Hiring Your Pinch Hitter: If you are getting older, you may want to spend some time thinking about what life will look like in the next stage. Find a neighbor, friend or extended family member you trust that would be willing to come help you out with odds and ends. This can mean anything from balancing your checkbook, household chores, taking care of the yard/snow or driving you to appointments. If you moved away from family and your friends cannot be of help, consider reaching out to neighbors. Never underestimate a little cash to motivate the neighbor boy or girl. Another option is to contact your local Area on Aging Agency for guidance for resources in the area.
Taking care of these things to protect your future can make you financially sound and savvy! Have any questions? We can help!
By Greg Johnson
All of the things Kristi refers to above are true whether you are single or married, but often times people who are married rely heavily on their spouse for a lot of these items. If you are single, you don’t have that option, so take the time you need to organize your affairs as you go forward. Being in control of your finances and life will make a world of difference when it comes to your self-confidence as well.